As recent victims of Hurricanes Helene and Milton have found out, a homeowners policy comes with exemptions for flood and storm surge damage. Homeowners often don’t understand their coverages and are unaware of gaps in their coverage. 

According to a survey by Trusted Choice, 86% of surveyed homeowners claim they know what their home insurance policy covers but a shocking 56% of respondents thought that a standard policy covers flood damage which it doesn’t.

Unfortunately, for hurricane victims of Asheville, North Carolina, less than 1% of homeowners in the area were carrying flood insurance. This means that most homeowners will be covering much of their damage out of pocket. 

Understanding what is covered by your insurance policy is important because coverage gaps can be extremely expensive and quite a financial shock if you need to cover a huge repair bill on your own. 

Review your policy annually

It is important to review your policy on an annual basis to make sure your coverage levels are still sufficient. If you have made improvements to your home, added square footage or if building costs have gone up in your area, you may need to up your coverage limits. 

It is a good idea to look for guaranteed replacement cost coverage when it comes to dwelling coverage. This type of policy will pay to rebuild your home regardless of whether inflation and labor costs have increased building costs. 

If you have an outbuilding, shed, swimming pool, barn, guest house or other structures on your property you will want to verify that your policy comes with “other structures” coverage which is usually included with a standard homeowners policy. “Other structures” coverage limit is typically a percentage of your dwelling coverage, but the percentage varies by insurer so verify your coverage levels are high enough to cover any structures on your property. 

Your personal property, such as electronics, furniture, clothing and other items in your home are protected by the personal property section of your policy. Coverage limits for personal property is usually 50% to 70% of your dwelling coverage. As an example, if you are carrying $300,000 in dwelling coverage, your personal property would be insured at $150,000 at 50% or $210,000 at 70%. Verify your policy coverage level will pay to replace all of your personal property. 

Special Coverages

It is always important to review your policy to identify any coverage gaps or special deductibles. Flood and storm surge damage is always excluded from a standard homeowners policy but in some areas, other perils may require an additional policy or deductible. 

As an example, in states where hail or wind damage is common, homeowner policies may come with a separate percentage deductible for wind or hail damage. This means you may pay a percentage of your dwelling coverage as your deductible for wind or hail damage. If you are carrying $300,000 in coverage and have a 3% deductible for wind or hail, your out-of-pocket costs will run $9,000.

It is always a good idea to read your policy in full and ask your insurer about any exclusions or special deductibles you need to understand. 

Flood Insurance 

Flood insurance can be expensive, but it can be a financial lifesaver if you home is flooded. Damage from floodwaters or storm surge is not covered by homeowners insurance and can quickly add up. If you need flood insurance, coverage can be purchased in the private market or via FEMA’s National Flood Insurance Program (NFIP).

Supplemental Insurance

High value items such as jewelry, art, silver and other collectibles often come with a coverage cap. While the cap will vary by insurer, $1,500 is a common limit. If your high value items need to be covered at a higher level, you may need to pay for additional coverage which is called a rider. 

Riders may also be available for specific dog breeds that are excluded from standard coverage. Pitbulls are a common exclusion for coverage, but you may be able to purchase a rider for your specific dog. 

“If you have an aggressive dog, that’s not necessarily covered if your dog bites someone on your property,” he said. “You may be able to get extra coverage for this. If you’re remodeling, you may want to get construction damage and liability coverage for the project.”

Collectibles, jewelry, art and silver often need supplemental coverage since the limits in a standard policy are typically too low for fine jewelry and other expensive items, O’Connell said. In that case, homeowners can purchase additional insurance with a list of specific items and their value. Proof of purchase or an appraisal may be required for this supplemental insurance.

“An umbrella insurance policy, which provides additional insurance of $1 million or $2 million or more above your homeowner’s and auto insurance policies is generally a good idea for homeowners with expensive homes or a lot of assets,” Schafer said.